- Healthcare companies are expected to remain relatively stable despite heightened scrutiny from policymakers, according to a new Fitch Ratings report released Thursday.
- Insurers are likely to simply pass the costs onto employers that fund much of healthcare if pressured for more price transparency, the analysts predicted.
- "Until a clear consensus for legislative change emerges, there is limited potential for a major disruption to the status quo for the pharmaceutical supply chain and health insurers," analysts wrote.
Few issues in healthcare have as much bipartisan and voter support as controlling the high cost of prescription drugs. Eye-popping price tags of life-saving drugs have led to myriad proposals to rein in prices.
Most notably, HHS pitched a plan in October to create a pricing index linking the cost of drugs in Medicare Part B to their (often much lower) cost in foreign countries. The plan, which would likely be effective in lowering prices, is still in the initial stages of the rulemaking process. Industry groups push back on the proposed International Pricing Index, skewering it as anticompetitive price fixing.
Another controversial measure requiring drugmakers disclose the list price of their products in direct-to-consumer television advertising was finalized earlier this month.
None of these measures, however, are likely make much of a dent, Fitch said. "Price transparency may seemingly provide useful information to consumers; however, overall use of data remained low and has proven to be unsustainable," according to the report.
Additionally, White House insiders report President Donald Trump will soon issue an executive order mandating public disclosure of the negotiated rates between insurers and providers, meant to spur price transparency across the board by requiring upfront disclosure of prices before patients receive treatment.
"Regardless of the effect such disclosures have on the cost of healthcare services, however, insurance companies will adjust premium rates as necessary to cover the cost for underwritten business, and pass the cost on to employers for self-funded business," Fitch wrote.
Another popular target of the administration's ire is the drug supply chain middlemen: PBMs. The administration announced earlier this year a plan to end safe harbor protections for drug rebates through PBMs, Medicare Part D plans and Medicaid managed care organizations, sending payer stocks tanking, though analysts predict the proposal's impact on PBMs will be minimal at most.
Fitch expects margins within the drug supply and payment chain to remain stable given pharma's ability to defend its medicines from competition and PBMs and payers ability to adjust fees and premiums in the market, passing costs on to employers.
In the end, the average American isn't sure that policymakers will be able to solve the problem of skyrocketing healthcare costs, with almost 70% surveyed by nonprofit West Health and Gallup in April "not at all" confident in the government, regardless of political party. And doctors generally doubt pharmaceutical costs will improve.
"It is unclear whether the recommendations being put forth will achieve the goal of moderating the prices of prescription drugs, or what the knock-on consequences may be for the various groups in the healthcare market," Fitch researchers wrote in Thursday's report.